Non-compete

There is a story which is bubbling in the USA at the minute surrounding the use of non-compete clauses in contracts. I listened to a podcast discussion on it recently with interest, and read a post and whilst the differences to the UK radio market are stark, the argument chimed a bit.

Firstly, what is a non-compete clause? They exist in staff and freelance contracts and essentially say, “after you have worked here, or your contract ends, you can’t work for a competing business (sometimes geographically restricted or involved in the same area of business), for a period of time (normally measured in a number of months). I don’t pretend to be a legal expert at all, and so my explanations are purely my own take on the restrictions and its true that there is some guidance about any restrictions being “reasonable”, (that lovely none specific legal word!). The radio and media world is not alone in using them and its fairly straightforward to see the sense and rationale behind them: we don’t want our talent going across the road and working against us at a competitor, turning our “friend” into our “enemy” overnight.

For a freelancer, that can have quite the impact of course since the “post term” period after the contract has expired can mean no income. There is an interesting viewpoint from another industry, from a freelance writer in the US.

This is the bubbling background noise playing when I read the recent furore over Ken Bruce ending his on air stint at BBC Radio 2 earlier than he first thought (judging by his social posts), before starting at GHR. In fairness I’m not suggesting that any non-compete is relevant here at all, but the music playing contained some similar notes.

I have nothing to add to what has already been said about that specifically, and would suggest a read of my “friend with a huge brain”, Matt Deegan’s post on the subject which, as ever, is balanced and logical.

The argument brewing on the other side of the Atlantic though basically says, that those non-complete clauses prevent invention, innovation, wages and hurt future growth. The Federal Trade Commission in the states is proposing banning them, saying in their argument that they are, “a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses. By stopping this practice, the agency estimates that the new proposed rule could increase wages by nearly $300 billion per year and expand career opportunities for about 30 million Americans.” The impact on media has not gone un-noticed either as you might expect, and its impact on “millions of contracts” has been mentioned in response by the NAB (National Association Of Broadcasters in the US.

Put another way, if you tie up the best talent and prevent them from entering the wider job pool available to your competitors, then you take them out of play for a time, reduce their ability to create something elsewhere which is new and exciting or perhaps not been done before. The point also often stated is that they put a thumb on the power balance scale in favour of the company, reducing the value, care and attention afforded individuals, since their “cost of leaving” is high. Think what it would be like if they didn’t exist. How might the relationship with presenters nearing the end of their contract, or their agents change if they were free to go across the road? The power balance would change dramatically I suspect. That is the basic argument anyway in a nutshell. During the Covid Pandemic in 2020-21, the UK also looked at the issue and had a consultation regarding changes which would, “support economic recovery from the impacts of COVID-19, the government is exploring avenues to boost innovation, create the conditions for new jobs and increase competition”, thereby perhaps suggesting that their existence does the opposite? As yet there isn’t an outcome to this consultation and no indication that there will be one I suppose.

I have seen this from both ends of the argument, having been involved in hiring where people are prevented from working for me, or with a competitive provider for a period and also been under the same “post term” restriction myself. I can see the issue from both sides actually and find it fascinating to see the arguments played out in the US where there is an active proposal- which may well end up going nowhere of course. In any case I wonder how much traction the thoughts and considerations might get, and how far the ripples will go. As I say, its not something which is restricted to the media and radio world at all, but with a relatively small talent pool the impact can be quite dramatic.